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Forex Today: BOE and ECB take center stage

Here is what you need to know on Thursday, February 3:

The dollar managed to stage a modest rebound in the late American session on Wednesday but the US Dollar Index ended up closing the fourth straight trading day in the negative territory. Ahead of the European Central Bank's (ECB) and the Bank of England's (BOE) highly anticipated policy announcements, major currency pairs stay relatively quiet. Later in the session, weekly Initial Jobless Claims, December Factory Orders and January ISM Services PMI will be featured in the US economic docket.

Meanwhile, US stocks futures indexes are down between 0.3% and 0.5%, pointing to a cautious market mood early Thursday. 

The ECB is widely expected to keep its policy settings unchanged following the February policy meeting but ECB President Christine Lagarde's comments on the inflation outlook will be watched closely by market participants. On Wednesday, Eurostat reported that the annual HICP in the euro area reached an all-time high of 5.1% in January. 

ECB February Preview: Euro bulls hope for a hawkish ECB on hot EU inflation.

The BOE is set to hike its policy rate by 25 basis points to 0.5%. Investors want to know how the bank plans to unwind its massive QE and whether or not additional rate hikes will be needed later this year.

BOE Preview: Bailey needs to go beyond a rate hike to boost GBP/USD on Super Thursday.

EUR/USD climbed to a fresh weekly high of 1.1331 on Wednesday before going into a consolidation phase around 1.1300 early Thursday. A hawkish ECB tone could help the euro continue to gather strength against the dollar and vice versa.

GBP/USD advanced toward 1.3600 but lost its traction. The pair was last seen posting small daily losses around 1.3550.

USD/JPY is moving sideways in a narrow band around mid-114.00s in the early European session. The benchmark 10-year US Treasury bond yield continues to fluctuate between 1.8% and 1.75%, making it difficult for the pair to make a decisive move in either direction.

Gold extended its rebound to $1,811 on Wednesday but started to retreat toward $1,800 early Thursday. 

After rising toward the key $40,000 mark on Thursday, Bitcoin reversed its direction and lost more than 4% on a daily basis. BTC was last seen trading at around $37,000. Ethereum snapped a two-day winning streak on Wednesday and continues to edge lower toward $2,600.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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